Early Retirement Pension
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One can opt for an Early Retirement Pension plan as early as 55 years of age. However, the monthly payments for early retirement pension plans are lower than the regular pension plans. The pension amount will be calculated on the basis of a person’s pensionable service and final pensionable salary.[br]
Early Retirement Pension: Eligibility
The rules of an early retirement pension vary based on the policies of the country’s government and the service providers. However, most retirement schemes allow early retirement due to ill health when a person is incapable of continuing with their occupation. The UK government pays State Pension only after completion of the pension age, which is 65 for men and 60 for women, The UK government, however, provides 100% of a person’s pension fund as a tax-free lump sum when s/he has a serious illness.
The State Pension is calculated on the basis of qualifying years. A qualifying year is a tax year in which one has sufficient earnings and has contributed to the National Insurance. Company and personal pensions allow a person to retire as early as 50 years of age.
In the US, one should have reached at least 55 years of age and have at least 10 pension credits to be eligible for an early retirement pension.[br]
Early Retirement Pension: Money Purchase Schemes
There are certain important things you should consider in early retirement pension if you are a member of a stake holder pension, personal pension or money purchase scheme.
First, you will have only a few years to pay and the pension fund will be smaller. Secondly, the pension amount you will get will be smaller because your fund has to provide you an income over a longer period. However, some providers will increase your pension amount if you are retiring early due to an illness that would decrease your life expectancy.
You can consider certain options if your pension will not be sufficient to cover you after retirement. You can buy added years in final-salary schemes. You can increase your contributions to a personal or company pension. You can also consider tax saving investments, such as Individual Savings Accounts (ISAs) to support your retirement pension. It is better to seek the help of an authorized financial advisor if you feel your pension will not cover your retirement.
